The Business Case for Digital Pathology

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The Business Case for Digital Pathology

• A work in progress . . .
• Luke Perkocha, UCSF

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What will I talk about today?

• WSI mainly, though static and dynamic telemed
  gross imaging teleconferencing other IT
  applications, AP-LIS systems, maybe as important,
  as enabling technologies
• Clinical, educational apps. not research
• A couple of basic business principles
• The drivers for digital radiology/PACS
• Some niche business cases now
• ? Catalysts for more rapid adoption

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Who am I?(My perspective)

• Interested novice
• Career in Private Practice
• Dot-com Vet
• Recent career change Academics
• Thought experiments no data!
• Disclosure Aperio MAB

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Where am I?

• Academic medical center
• Competitive market environment
• Only limited digital pathology now
• Gross photos, not stored in LIS
• Robotic scope for FS at home, Tx service, very
  limited daytime use for consultation on FS
• Manual quantification of ER/PR Her2
• WSI Images used in teaching, still have scopes
• No document management
• No images in reports or LIS
• No WSI imager in-house

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Business principles
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Business principles

• Things that dont work

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Were losing money on every case we can make
it up on volume

• Example UCSF Teledermatology
• Store and forward model
• Underserved (under-insured) population
• Phone calls, secretarial time, paperwork,
  coordination, billing problems
• Recognized and being addressed
• Digital Pathology Dream The world is our
  market! make sure it doesnt take longer and
  cost more than mailed-in slides.

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I think this is the coolest thing everyone
will want it just as much as I do!

• Corollary Everyone will be willing to pay
  (extra) for it.
• Developing the market for something new and
  different is within the financial capacity of the
  organization.

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Business principles

• Things that work

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Potential Profit Mechanisms

• Increase revenue
• More for same thing New CPT, extra pay for
  digital enhancement of what we do now (Thin
  Prep)
• More for new thing on same spec New CPT, extra
  pay for digital analysis (extrapolation /
  quantification / CAD), what we cant do now, but
  on same specimen (HPV)
• Virtualization expands geographic market from
  new customers, increased volume from a new
  business channel
• Lower costs
• Lab benefit - Increased productivity (?cost/unit
  lab svc) create capacity
• Institutional benefit in a dispersed
  multi-specialty department, ?TAT (even if ?lab
  cost) may save on overall care delivery (Mayo
  model)
• Reduce non-productive costs (errors, losses,
  redos)

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Looking at radiology Early drivers

• Lost films legal staff time re-do patient
  care lost revenue
• X-sectional images radiologists quickly
  overwhelmed PACS enabled stack mode
• Radiologist shortage

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Source Dreyer, et. Al. PACS, 2nd ed. 2006
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Source Dreyer, et. Al. PACS, 2nd ed. 2006
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Source Dreyer, et. Al. PACS, 2nd ed. 2006
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Sunshine and Meghea. AJR 187 November 2006
Q
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Hypotheses Investigated

• Growth of imaging abated No, up 23
• Non-radiologists doing more No, rads up 15
• More offshore outsourcing Yes, but Americans
• Radiologists retiring later No
• More residents turned out No
• Fewer residents take fellowships No
• Radiologists working more hours No

CONCLUSION. Increased productivity is the
predominant explanation of how the radiologist
shortage eased. The contribution of other factors
was, in comparison, small or even in the opposite
direction.
A
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How is it that productivity increased enough
between 2000 2003 to not only handle the
increased workload, but ease the shortage of
radiologists?

• Hi tech digital imaging and PACS, other
  technology (telephony, EMR results delivery,
  etc.)
• Lo tech improvements in workflow, use of
  physician extenders enabled by technology

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Radiology Unexpected drivers

• Productivity gain from digital PACS workflow
  improvement overall 30
• Growth capacity with same staff ?
  ? technical and pro fee revenue a real ROI for
  radiologists, hospitals AND industry
• Medicare contemporaneous reading requirement
• Nighthawks lifestyle issue

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Tracked Costs Eliminated

• Digital Radiology
• Labor developing, storing, retrieving, 24/7
  staffing
• Capital Developers, Film alternators, misc.
• Consumables film, developer chemicals, film
  jackets
• Disposal chemical waste, recycling
• Space darkroom, film storage

• Digital Pathology
• Labor ? courier
• Capital ? cars
• Consumables ? recuts for lost slides
• Disposal ?
• Space ? glass slide storage (legal to be solved)

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Glass-based Pathology Untracked Costs

• Pathologist productivity loss from batch mode
  operation, bad workflow will pathology PACS fix
  this?
• Wasted staff time looking for lost tumor board
  slides pulling old bx for compare, etc.
• Delay in diagnosis, waiting for sub-specialty
  consultation courier slide transport from remote
  lab
• Patient safety / errors (if PACS forces machine
  tracking of assets)
• Opportunity costs of lost business due to slow
  TAT

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Perfect storm for adoption of digital radiology
and PACS
X-S Data Expl
Lost Films
Rad Shortage
DICOM
Overt Cost Reduction
Comp Pwr, Cost
Profit Potential
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Perfect storm for adoption of digital pathology
and PACS?
/ -
IPOX Data Expl
Lost Slides
Path Shortage
SOON
Standard
Overt Cost Reduction
YES
Comp Pwr, Cost
Profit Potential
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• Digital pathology is no longer a dream. Doctors
  have begun to diagnose diseases by using
  computers like microscopes Pathology is just
  beginning to enter the digital era Its a change
  that promises faster diagnoses for patients and
  potential cost savings for hospitals.
• Story on PBSs Nightly Business Report, July 10,
  2008

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• Doctors in the US and other countries have long
  practiced variations in telemedicine to provide
  care to underserved locations. But in the
  future, telemedicine will be practiced more as a
  way of distributing work loads and lowering
  costsOutsourcing and offshoring of medical
  services will increase, providing more
  cost-effective healthcare.
• Wall St. Journal, Oct. 20, 2008

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• In the future, there will be three often
  overlapping modes of delivering healthcare
  services performed in person by humans
  performed by people at a remote location
  performed by computers without direct human
  involvement.
• Wall St. Journal, Oct. 20,2008

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Storm clouds gathering in pathology?

• Patient safety ? media focus ? a brand issue
  for the institution
• Histotechnologist shortage ? breakthrough
  robotics (continuous flow) or skip the glass
• Path PACS perceived as a growth market by
  mega-technology companies?
• DICOM 26 or other bar code effort APIII
• Demographics newpath _at_ home
• Disruptive biz models off-shoring e-Bay for
  biopsies virtual practice models

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Applications Considered at UCSF

• Medical Education Students, residents, CME,
  remote learning
• Remote FS nights, expert at other hospital
• Virtual Consultation distributed practice (may
  have clinical ROI)
• QC IPOX
• Tumor Boards Spinosa study, requires PACS to
  realize full potential cost savings
• Quantitative image analysis
• Other CAD applications
• Routine digitization of all cases ???
• New business models, enabled by virtualization

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Education

• Med Student Histology / Pathology courses
  improved quality, inexpensive, but no cost
  savings other places get rid of scopes
• Resident frozen section / teaching archive
  improved quality, inexpensive, but trivial cost
  savings from current system
• CME cases distributed virtually, some cost
  savings w/o glass slides, improved revenue if
  attractive to registrants
• Competitive advantage ? price of entry

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A Big Hairy Audacious Business Case

• Dot-com era justification to ask for ridiculous
  sums of money to commercialize a hair-brained idea

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Summary

• No compelling business case now for full
  digitization of routine cases in most labs
• Niche business cases exist now
• Education, Remote FS / Consultation, IHC
  Quantification
• Tumor Boards, QC
• These may not apply in all settings local
  cost/benefit must be assessed
• Routine digital path probably will make business
  sense in the future, but when?
• Catalysts that bring this about may not be the
  ones we now predict

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Thanks !!

• Ron Arenson, David Avrin, Radiology UCSF, ASNR
• Paul Chang, Rads and Path, U Chicago
• APIII Faculty
• Bruce Wintrobe, Ilona Frieden, Dermatology, UCSF
• Abul Abbas, Linda Ferrell, Pathology, UCSF